Housing the latest skirmish pitting progressive government against zombie neoliberalism

OTTAWA—From the explosion of the munitions ship that destroyed part of Halifax in 1917 until the election of former prime minister Brian Mulroney in 1984, the federal government had been heavily involved in Canada’s housing policy. Under periodic pressure from the Depression to the return of Second World War veterans to Canada’s postwar urbanization—the most rapid in the industrialized world—and the 21 per cent interest rates of the 1980s, the federal government has tried out every program, tax initiative, funding incentive, loan guarantee, and subsidy imaginable in relation to this subject. Better living conditions, severe housing shortages, lack of affordability, urban renewal, economic stimulation, poverty reduction, and other issues motivated federal ministers on this file for more than 60 years. This was the case despite the fact that, as Prime Minister Justin Trudeau recently pointed out, housing was not primarily a federal responsibility. Now, facing possible political devastation, the Trudeau government has decided to take on the national housing crisis in a full-bore, government-wide fashion. Except for Ottawa’s gargantuan effort to protect Canadians and their livelihoods from COVID, it’s the most extensive, multi-faceted set of pro-growth programs brought in by any federal government in recent memory. The measures anchor the 2024 budget. As part of its novel pre-budget rollout, the federal government has announced billions of dollars in spending commitments intended to make it easier in the long run to own a home as well as helping renters. “We are releasing the most comprehensive and ambitious housing plan ever seen in Canada,” Trudeau said, previewing the budget. “It builds on the sizeable investments we've made over the years and it goes a lot further.” The plan envisions building 3.9 million homes by 2031. The size of Ottawa’s latest comprehensive foray into housing is commensurate with the current shortage-affordability mess, which has grown over recent decades as a result of a mix of political, demographic, and financial factors. These include the attractiveness of Canada to speculators, failed provincial and municipal housing policies, the fact that 80 per cent of Canadians live in cities, tax favouritism, historically low interest rates, household debt tolerance, and declining middle-class real incomes. By 2023, average Canadian house prices were 80 per cent higher than a decade earlier, and the price bubble, which had previously been mainly seen in major cities, had spread across the country because of the remote work trend during COVID. The growing disparity in wealth between homeowners and those who cannot afford to buy into the residential lottery has become a pressing matter of inequality, not to say rights. “Wealth inequality in Canada is not just a story of rich versus poor, it is one of homeowners versus non-homeowners,” TD Bank economists state in their study, Digging Beneath The Surface: Is Housing Perpetuating A Wealth Divide in Canada? “Even up to the mid-2010s, the benefits of rising home valuations were accruing to a much broader range of households on the wealth and income spectrums under better accessibility,” the economists write. “That thread of the narrative is now fraying, as rapid home price gains have limited accessibility to either high-income households, investors, repeat buyers, or those who benefit from pre-existing family wealth.” The resulting imbalance in outcomes, the TD study concludes, highlights “the importance of housing accessibility, not just as a basic necessity-of-life, but also as a natural lean against inequality.” Importantly, the Liberal government proved during COVID that increasing financial transfers to those needing assistance can make a major difference in economic well-being. While no one expects the new housing strategy to solve the crisis in the short term, it has to be seen as a meaningful start with potential to address the housing shortage and improve accessibility and affordability for younger people in the years ahead. Trudeau rightly called it a matter of generational fairness. But beyond the effectiveness of Ottawa’s new approach—something that won’t be known for some time—there is the overarching question of whether Canadians will view the federal government’s commitment in this area as genuine and worth supporting. Opposition is already intense, with critics calling Trudeau’s housing spending inflationary and irresponsible, and provinces raising jurisdictional objections. The Conservatives, who have blamed Trudeau for the housing mess and relied on the issue in part to gain a commanding lead in the polls, derided the Liberals’ pre-budget announcements as meaningless, multi-billion-dollar photo ops. On this and other social issues, what it comes down to is whether Canadians will stick with an activist, progressive government, or are ready to embrace a return to so-called “zombie neoliberalism” that prioritized the interests of business and the wealthy at the expense of everyone else from the 1980s to 2015. Today’s wealth inequality—including with housing—took shape during those years, and is only likely to get worse under a right-wing party that wants to reduce the role of the federal government in every aspect of Canada’s socio-economic life. Les Whittington is a regular columnist for The Hill Times. The Hill Times

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Housing the latest skirmish pitting progressive government against zombie neoliberalism

The growing disparity in wealth between homeowners and those who cannot afford to buy into the residential lottery has become a pressing matter of inequality.

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